Kerosene is misused in many parts of the country said Finance Minister Arun Jaitley. (File)

New Delhi: After the initial experiment in food and fertiliser, better targeting of kerosene subsidy is next on government agenda to plug diversion and black marketing of the fuel, Finance Minister Arun Jaitley said.

"Kerosene in some parts of the country is used as fuel, and in many parts... is misused. There is a huge amount of diversion... So, states are making efforts to become kerosene free because of a lot of diversion taking place," he said at an event of the Observer Research Foundation in New Delhi today.

He specifically made a mention of Union Territory of Chandigarh and Haryana trying to become kerosene free.

"That's one of the next items which is on the agenda as far as rationalisation is concerned, but there is still a section of society which uses kerosene as a fuel and therefore, you have to find a mechanism (as to) how to deal with the kerosene problem," he said.

With an aim to take PDS kerosene to the targeted beneficiary, it has been decided to implement the direct benefit transfer in kerosene (DBTK) in 39 districts in 2016-17. The districts spread across nine states have been identified in consultation with local governments, including Punjab, Gujarat, Himachal Pradesh, Madhya Pradesh and Chhattisgarh.

Giving examples of on-boarding of various government schemes on DBT, he said the government is now experimenting in various areas.

"Somewhere fertiliser is being experimented, somewhere food... One of the the great advantages would be to plug leakages, eliminate corruption and duplicacy and better targeting of subsidy," Mr Jaitley added.

It helps the government reach the targeted section more effectively and save money in the process that can be used for social programmes or alternatively, other developmental activities, he said.

"We are in the initial stages of various areas of implementation and I think the apprehensions which existed a couple of years ago have been to a large extent adequately addressed. Direct payment through this whole process of identification is slowly going to become the rule and not resorting to it would be an exception," he said.

"The whole idea is that in reaching the weakest section, the leakages takes place and only a small fraction reaches the targeted entity, and I think we will be able to get over that curse."